In 2024, India worked to stabilise its volatile periphery; in 2025, it must adopt a long-term, pragmatic approach and aim at a few short-run wins
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India’s neighbourhood in 2024 remained turbulent, even as it sought to stabilise its bilateral relationships in South Asia. In the year, India pursued cautious engagement with its traditional adversaries, China and Pakistan, while making tactical adjustments to address the quagmires in Afghanistan and Myanmar. At the same time, India engaged with the new governments in Bangladesh, Sri Lanka, Maldives, and Nepal. These smaller neighbours, which functioned as a balancing force between India and China to different degrees, experienced shifts in sentiment—often a surge in anti-India rhetoric. The regime change in Bangladesh emerged as the most concerning development, with the prospects of democratic restoration appearing increasingly bleak. Amidst these challenges, Bhutan stood out as India’s most reliable ally, despite facing pressures from China.
India demonstrated its commitment to the “Neighbourhood First” policy, even as domestic discourse increasingly acknowledged the strategic autonomy of its neighbours and recognised that internal factors driving regime changes or anti-India sentiments were often beyond New Delhi’s control. Prioritising its neighbourhood has been a longstanding tradition in Indian foreign policy. From Nehru’s Panchsheel principles in the 1950s, advocating non-interference and peaceful coexistence, to the regionalism pursued through the South Asian Association for Regional Cooperation (SAARC) in the 1980s, and the Gujral Doctrine of the 1990s, which emphasised non-reciprocity and respect for smaller neighbours, India has consistently sought to ground its diplomacy in South Asia. The Modi government’s “Neighbourhood First” initiative, launched in 2014, underscored this commitment, beginning with the inclusion of SAARC leaders, including Pakistan’s ex-Prime Minister Nawaz Sharif, at Modi’s first swearing-in ceremony. This tradition continued into 2024, as the re-elected Modi government celebrated a decade of this policy by inviting regional leaders to the inauguration of its third term; however, Pakistan was notably excluded this time.
India demonstrated its commitment to the “Neighbourhood First” policy, even as domestic discourse increasingly acknowledged the strategic autonomy of its neighbours and recognised that internal factors driving regime changes or anti-India sentiments were often beyond New Delhi’s control.
The ousting of Sheikh Hasina in Bangladesh this August, accompanied by a rise in anti-India rhetoric in Dhaka, reignited debates over whether India is perceived by its neighbours as an overbearing big brother, potentially ceding its influence to China or other adversarial forces. While not all neighbours view India as villainous, the country must now confront three enduring realities.
First, no neighbouring nation is likely to align fully with Indian interests, so India should engage with its neighbours as they are rather than as New Delhi wishes them to be. Second, South Asian nations will continue to hedge between the two dominant Asian powers, so India should establish itself as a compelling partner. Third, anti-India sentiments or regimes will periodically surface, demanding strategic patience and pragmatic engagement.
India's central challenge lies in crafting both immediate and enduring benefits for the ruling elites and the broader populations of its neighbouring countries. Even in a complex landscape where neighbours balance India against China, or where anti-India forces occasionally gain ground, India must focus on creating meaningful wins that promote stability and goodwill across the region. The value proposition that India must offer with clarity is: if its neighbours address India’s security concerns, India will be a dependable partner both for their security and prosperity.
Critics contend that New Delhi’s tendency to engage predominantly with friendly leaders and governments risks undermining its broader regional interests, especially given the ease with which benign ruling elites can be replaced by adversarial ones. While this critique carries some weight, India has increasingly embraced a pragmatic approach, engaging with less amenable regimes as well to safeguard its strategic objectives.
India’s historical reliance on aligned political entities reflects its need to navigate a region characterised by political volatility, an anti-India sentiment, and the growing influence of China. Recognising the limitations of this strategy, India has shifted toward a more realist South Asia policy, broadening its engagement to include nationalist, anti-India, and pro-China leaders, as well as coup-makers, balancing its principles with pragmatism.
India's central challenge lies in crafting both immediate and enduring benefits for the ruling elites and the broader populations of its neighbouring countries.
Economic initiatives have become central to India’s pragmatic approach in the region. Investments in regional connectivity—spanning railways, roads, ports and telecommunications—have established shared economic stakes. Over the past decade, India has significantly increased its credit lines, extending US$8 billion to Bangladesh, US$4 billion to Sri Lanka, and substantial support to other neighbours. Combined with developmental aid and India’s growing economic clout, these efforts have fostered cautious optimism among its neighbours.
However, competition with China continues to pose a formidable challenge. The interplay of South Asia’s domestic politics and Beijing’s influence complicates New Delhi’s attempts to safeguard its interests. To navigate these complexities, India is blending pragmatic diplomacy with deeper economic integration to mitigate risks and sustain its influence in this strategically vital region.
At the same time, India must refine its approach, recognising that a one-size-fits-all policy cannot address the distinct needs of its three categories of neighbours: adversaries, failing states, and smaller, hedging nations. Tailored strategies for each group will be essential to safeguard India’s long-term interests.
In 2024, India and China tried to return to normalcy following the 2020 military standoff. High-level meetings, including an October Modi-Xi interaction and an engagement in December between National Security Advisor (NSA) Ajit Doval and Chinese Foreign Ministry (FM) head Wang Yi, focused on troop disengagement and maintaining peace along the Line of Actual Control (LAC). However, mistrust persists due to China's assertive military posture in Ladakh and a larger strategic rivalry with India. New Delhi seeks tactical adjustments rather than strategic breakthroughs, given the trade volume of over US$130 billion with Beijing. Its approach is bolstered by global diplomacy, such as the Quadrilateral Security Dialogue—a grouping of Australia, India, Japan and the United States—to counter China’s belligerence.
India reached out to Pakistan despite longstanding tensions. External Affairs Minister (EAM) S. Jaishankar attended the Shanghai Cooperation Organisation (SCO) Summit in Pakistan—the first such visit in nine years. This was followed by renewing the Kartarpur Corridor agreement for visa-free pilgrimages. Pakistan's ongoing political and economic crises have triggered some stabilising signals, but India has emphasised that curtailing cross-border terrorism in Jammu and Kashmir is key to improving ties. A window for rapprochement remains open in 2025.
Three years post-coup, Myanmar has spiralled into civil war, with only 14 percent of its territory under stable junta control. Violence has displaced millions, creating a humanitarian crisis that affected 18.6 million people in 2024. India's Northeastern border faces risks from cross-border insurgencies, terrorism, and drug trafficking. Instability also threatens India's US$484 million Kaladan Multi-modal Transit Transport Project, crucial for connecting its eastern coast to the Northeast. Balancing relations with the junta and ethnic groups is essential to safeguard strategic interests.
Under Taliban rule, Afghanistan faces economic collapse, food insecurity, and extremist threats from the Islamic State–Khorasan Province (ISIS-K). India’s pragmatic approach balances humanitarian aid and engagement with the Taliban through a coordination mission, while opposing anti-India activities and pushing for inclusive policies, particularly in education for women. India has supported Afghanistan through more than 500 development projects and continues to maintain goodwill with its people, ensuring minimal recognition of the Taliban regime while monitoring security risks.
Since Sheikh Hasina’s ouster in August, Bangladesh has distanced itself from India. Its pro-India stance of 15 years fostered security and economic cooperation, but the interim government under Muhammad Yunus signals a shift, leaning towards Pakistan and other actors. The resurgence of the BNP and other Islamist groups raises concerns for India’s security and minority rights in Bangladesh. India must intensify its engagement with the new regime while emphasising its security and concerns over minorities.
Nepal's pro-China tilt under PM K.P. Sharma Oli was reinforced in his December visit to Beijing, marked by Belt and Road Initiative (BRI) agreements and a reduced reliance on India. While hedging between India and China, Nepal seeks unique benefits from India. New Delhi must recognise this reality and deepen ties through mutual advantages.
Maldivian President Mohamed Muizzu's first bilateral visit to India signalled a shift from his earlier anti-India rhetoric. Economic challenges have prompted a recalibration of policy, reversing the "India Out" campaign and emphasising a normalisation of ties.
India’s regional strategy reflects a delicate balancing act: navigating adversarial relations, managing spillovers from failing states, and sustaining influence over neighbours hedging between global powers. Safeguarding its interests in this complex and dynamic environment requires a blend of diplomatic pragmatism and robust economic initiatives.
India’s neighbourhood policy calls for strategic patience, a willingness to engage with occasional anti-India regimes, navigating competition with China, and rejecting zero-sum approaches. A durable framework for regional security and prosperity should prioritise grants over loans, emphasising economic and security cooperation, connectivity, and humanitarian assistance. Key areas of engagement include energy collaboration, development aid, defence partnerships, disaster relief, cultural exchanges, and infrastructure projects. Encouraging QUAD partners like the US, Japan, and Australia to participate in South Asia’s economic initiatives could bolster regional stability, even amid occasional differences. Reviving SAARC as a platform for dialogue, complemented by sub-regional mechanisms like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and BBIN (Bangladesh, Bhutan, India, Nepal), would offer an alternative to reliance on the China-led SCO.
India’s neighbourhood policy calls for strategic patience, a willingness to engage with occasional anti-India regimes, navigating competition with China, and rejecting zero-sum approaches.
Ajay Bisaria is a Distinguished Fellow at the Observer Research Foundation.
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Ajay Bisaria is a Distinguished Fellow at ORF. He is also a strategic consultant and commentator on international affairs. He has had a distinguished diplomatic ...
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